![\"\"](\"https:\/\/www.livabl.com\/articles\/wp-content\/uploads\/2019\/02\/canadian-housing-market-overvalued.jpg\")
<\/a><\/p>\nPhoto: James Bombales<\/em><\/p>\n If snarky comments about a Toronto \u201cshack\u201d listed for $2.5 million<\/a> are any sign, there\u2019s no shortage of Canadians who feel real estate is way overvalued in big cities \u2014 but federal analysts are now showing less concern about out-of-whack home prices, at least in some markets.<\/p>\n Despite once again flagging the Canadian housing market as showing moderate evidence of overvaluation on the national stage, the Canada Mortgage and Housing Corporation (CMHC) has downgraded its overvaluation assessments for two of the country\u2019s provincial capitals.<\/p>\n “We are seeing overvaluation pressures unwinding in Toronto and Victoria, despite the fact that Canada\u2019s overall vulnerability remains high,\u201d says Bob Dugan, CMHC\u2019s chief economist, in a statement.<\/p>\n\n This past October, CMHC said both cities were highly vulnerable to overvaluation as of the second quarter of 2018. But looking at the year\u2019s third quarter in its updated Housing Market Assessment<\/a>, the national housing agency gave the markets a less-severe status of having a \u201cmoderate\u201d degree of vulnerability.<\/p>\n In Toronto, the gap between actual home prices and CMHC\u2019s estimate for where price levels should be is getting slimmer. In part that\u2019s because employment within the home-hungry young-adult population has increased. Income gains have also kept up with house price movement.<\/p>\n